Castle Brands Reports Third Quarter Fiscal 2007 Financial Results.

Castle Brands Announces Largest Quarterly Case Sales to Date

Boru Vodka U.S. Case Sales Increase 46% in Third Quarter

NEW YORK -- Castle Brands Inc. (AMEX:ROX), an emerging global premium spirits company reported financial results for the three months ending December 31, 2006, the third quarter of its 2007 fiscal year. U.S. case sales increased 8% to 48,593 nine liter cases in the third quarter and total case sales increased 6% to 91,682 nine liter cases despite a strong comparable quarter in the prior year. The quarter represented an all-time record quarter for case sales. Boru Vodka case sales showed particular strength in the U.S., increasing 46% in the quarter, before the launch of the new Boru packaging this spring. For the nine months ending December 31, 2006, total case sales increased to 242,295 cases, an 11% increase over the same period in the prior year. Net of non-recurring, one-off and discontinued sales of approximately 9,700 cases of Irish Cream, year over year recurring sales in the fiscal third quarter ended December 31, 2006 increased by 19,700 cases or 30%.

The U.S. accounted for 58% and international 42% of total nine months' sales. Based on its third quarter results, Castle Brands estimates case sales for its 2007 fiscal year ending March 31, 2007 will be in the range of 310,000 to 315,000 nine-liter cases.

Castle Brands reported net sales of $7.4 million for the quarter and $19.1 million for the nine months ended December 31, 2006, increases of 0.3% and 9% over the respective periods in the prior year. The relatively low revenue growth in the quarter was principally a result of the timing of distributor purchases and the product mix for the quarter. There was also an increase in direct imports of container shipments by our U.S. distributors, in which the distributors pay the federal excise taxes, resulting in lower average revenue per case paid to Castle Brands.

The gross profit margin in the third quarter increased 100 basis points to 33.1% for the three months ended December 31, 2006, compared to gross profit margins of 32.1% for the same period in 2005. The improvement in the gross margin was primarily attributable to a change in the sales mix. Selling expenses in the three months ended December 31, 2006 totaled $4.6 million, up 27% from the same period in the prior year. These higher costs were primarily due to an increase in distributor incentives and sales costs in support of building the brands, including significant investments in Gosling's Rum.

The company reported a net loss of $3.7 million for the third fiscal quarter 2007, compared to a net loss of $3.6 million for the same period for fiscal 2006. The net loss continues to reflect increased marketing costs to enhance brand awareness as well as increased public company expenditures. For the nine month period ended December 31, 2006 the company reported a net loss of $12.0 million, compared to a net loss of $9.6 for the comparable nine month period ended December 31, 2005. The increase in the loss reflects in part the added cost of operating as a public company, adoption of SFAS 123R (Stock Based Compensation), as well as continued focus on sales and marketing to grow the expanding portfolio of brands.

Cash and cash equivalents were $11.0 million at December 31, 2006, despite large increases in receivables and inventories and the payment of the $1.3 million cash portion of the McLain and Kyne acquisition.

Mark Andrews, CEO of Castle Brands commented, "I continue to be pleased with the way the business is evolving. Our multi-year investment in the development of a U.S. distribution network coupled with a broader product portfolio enabled the company to deliver faster growth in the U.S. than the overall company growth during the most recent quarter. We are pursuing several initiatives to increase international sales growth in the future. Mr. Andrews added "In the last year, we have ceased distribution of certain low margin Irish cream products. This change to the business, together with the impact of certain one-off sales which occurred in the third quarter fiscal 2006, resulted in a short term decline in our case sales of liqueurs. We believe, however, that this change will allow us to focus on higher-margin liqueurs going forward."

Reflecting further upon the three months ended December 31, 2006, Mr. Andrews added, "The third quarter represented a period of development for us, as we completed the acquisition of Jefferson's Reserve, Jefferson's and Sam Houston bourbons, which have received strong interest from our distributors and from which we expect to see positive case sales impact next year. We also strengthened our senior management team during the quarter with the hiring of a Chief Commercial and Marketing Officer, Mr. Claes Fick, who formerly ran Absolut Vodka in the U.S. and Europe, and a new Chief Financial Officer, Mr. Herb Roberts who was formerly the CFO of Helicon, a cable television company. Both of these gentlemen will provide invaluable expertise assisting the company in achieving its business and financial objectives."

Conference Call

Castle Brands will host a conference call to discuss third quarter results on Monday, February 12, 2007 at 4:40 p.m. ET. All interested parties in the U.S. are invited to join the conference by dialing [phone] and asking for the Castle Brands call. International callers should dial [phone] and ask for the Castle Brands call. The access code is 4629087. The Company suggests that participants dial in approximately ten minutes in advance of the 4:30 p.m. ET start of the conference call.

The conference call will be webcast and can be accessed from the Investor Relations section of the Company's website at www.castlebrandsinc.com or by clicking on the following link: http://investor.castlebrandsinc.com/eventdetail.cfm?EventID=34232.

For those unable to participate in the live call, a replay will be available by calling [phone] (U.S.) or [phone] (international). The access code is 4629087. A digital audio recording of the conference call will also be available on the Castle Brands website approximately one hour after the conclusion of the conference call. The replay will be available for at least 30 days following the conference call.

More about Castle Brands Inc.

Castle Brands is an emerging developer and international marketer of premium branded spirits within four growing categories of the spirits industry: vodka, rum, whiskey and liqueurs/cordials. Castle Brands' portfolio includes Boru[R] Vodka, Gosling's Rum[R], Sea Wynde[R] Rum, Knappogue Castle Whiskey[R], Clontarf[R] Irish Whiskey, Jefferson's[TM] and Jefferson's Reserve[R] Bourbon, Sam Houston[R] Bourbon, Celtic Crossing[R] Liqueur, Pallini[R] Limoncello[TM], Raspicello[TM] and Peachcello[TM] and Brady's[R] Irish Cream. (ROX-E)

Forward Looking Statements

This press release includes statements of our expectations, intentions plans and beliefs that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. We have used words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "thinks," "estimates," "seeks," "expects," "predicts," "could," "projects," "potential" and other similar terms and phrases, including references to assumptions, in this press release to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements.

When considering these forward-looking statements, you should keep in mind the cautionary statements in this press release and the documents incorporated by reference. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. We assume no obligation to update any forward-looking statements after the date of this press release as a result of new information, future events or developments, except as required by the federal securities laws.

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